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Catch it if you can! Finding £4 million of fraudulent money in Wales

Fraud – it’s not a nice word. The dictionary defines fraud as being a “deception deliberately practiced in order to secure unfair or unlawful gain”. The Fraud Act 2006 defines fraud in three areas – by false representation; by failing to disclose information; and by abuse of position. A common definition, which I have used for many years, is that fraud is the use of deception with the intention of obtaining an advantage, avoiding an obligation or causing loss to another party

In the current economic climate it is more important than ever to ensure that all available resources are used for the delivery of public services to those who are entitled to receive them. Fraud diverts money aware from these proper purposes and the National Fraud Initiative 2012-13: Ensuring the proper use of public funds published by the Wales Audit Office underlines the importance of doing what we can do to fight against it.

What is the National Fraud Initiative?

Started in 1996, the National Fraud Initiative (NFI) exercise, matches data across a number of different organisations and systems to help public bodies identify potentially fraudulent or mistaken claims and transactions.

Some examples of this could include matching housing benefit to payroll; payroll records to immigration data; blue badge holder records to deceased persons’ records and council tax records to the electoral register. Our recently published report contains some very good case studies of the types of fraud which the exercise uncovers. This year we have seen forty people convicted for fraud offences and sanctions placed on seventy three other cases. Those bodies participating in the initiative are to be commended for their diligence in following through the information which the exercise produces.

Since its inception the scheme has found £26 million of fraud and overpayments in Wales alone, and £1.17 billion across the whole of the UK. This process happens every two years.

These are pretty big numbers, which show the size of the fraud problem. The NFI is a vital tool in preventing and detecting fraud against public services.

Who else is involved?

At present forty-three Welsh public sector bodies take part in the exercise (some are mandatory participants whilst others are voluntary). This includes all unitary authorities, police forces, police and crime commissioners, fire and rescue authorities, all NHS bodies, Probation Trust, the Welsh Government, Cardiff University, Glyndwr University and the Wales Audit Office. There are a number of other partners, both public and private that take part in the scheme and the beauty of the NFI is that with more organisations involved, means more datasets to examine, which in turn leads to more fraudulent activities being spotted!

United we stand…

The Initiative’s true strength lies in its collaborative nature. The age old adage of “United we stand, divide we fall” is very pertinent in this case especially. Simply put, individually public sector bodies do not have access to all the datasets or resources to combat these cases themselves. However, when we come together and share data we can spot the anomalies easily and efficiently making it a lot simpler to work out what fraud has taken place and to put the necessary steps in place to combat them.

Huw Vaughan-Thomas commented on the report by saying “It is disappointing that, despite the proven track record of NFI in delivering savings, more organisations in receipt of public money in Wales do not take part on a voluntary basis. I would encourage all public sector bodies (or indeed any organisation) to contact the Wales Audit office to discuss the benefits of being involved in the NFI” and that’s something I would like to underline again.

The NFI is truly a cooperative piece of work between public bodies which deals with delivers real benefits for public services. The continuing support and assistance of these public bodies can only be strengthened with more data sets and we ask anyone interested to contact me (anthony.barrett@wao.gov.uk) to get involved in the 2015-16 Initiative.

About the author:

Anthony Barrett is the Assistant Auditor General – Financial Audit and currently the Appointed Auditor for principal local government bodies in Wales.